Persons active in the property industry will soon be subject to new legislation, bringing some important changes.
The National Assembly has adopted the Property Practitioners Bill (“the Bill”) which will repeal the Estate Agency Affairs Act. The Bill must still be passed by the National Council of Provinces and then be signed by the State President, to become law.
Who the Bill applies to
The term Property Practitioners is defined to include estate agents, rental agents, mortgage originators, property inspectors, valuators and property managers. Some people involved in the property industry will be excluded:
Persons engaged in the regulated property-related activities without reward will also be deemed to be Property Practitioners, subject to the regulatory requirements.
The Bill applies to Property Practitioners as defined, and to the marketing, promotion, managing, sale, letting, financing and purchasing of immovable property; and also to any rights, obligations, interests, duties or powers associated with or relevant to such property.
A Property Practitioners Ombud Office will be established to consider and dispose of complaints lodged in respect of the financing, marketing, managing, letting, hiring, sale and purchase of property; and also to provide mechanisms (mediation and adjudication) for the resolution of those complaints.
Fidelity Fund certificate
To act as a Property Practitioner, whether as principal or employee, will require a Fidelity Fund certificate. If a company, close corporation, trust or partnership engages in regulated property-related activities, then every director, member, trustee and partner must have a Fidelity Fund certificate. The Fidelity Fund certificate must be displayed at all times and must be referred to on all letterheads and marketing material. The Bill requires that any remuneration earned by a Property Practitioner whilst not in possession of a Fidelity Fund certificate must be refunded to the person who paid the remuneration, when that person makes a demand in writing for repayment.
In terms of section 55(5) of the Bill, a conveyancer may not pay any remuneration or other monies to a Property Practitioner unless that Practitioner has provided the conveyancer with a certified copy of his or her Fidelity Fund certificate valid on the date of the transaction to which such payment relates and also on the date of such payment.
Every Property Practitioner must open and keep one or more separate trust accounts with a bank registered in terms of the Banks Act, No. 94 of 1990
Defects: Mandatory disclosure
Sellers of a property will need to disclose all property defects – the Bill does not distinguish between latent and patent defects. A Property Practitioner may not accept a mandate to sell or let a property without such a mandatory disclosure form from the seller or lessor. This applies to both commercial and residential properties. The mandatory signed disclosure form will form part of the sale or lease agreement. If a written disclosure is not included, then the agreement will be interpreted as if no defects or deficiencies were disclosed.
In terms of section 57(1) of the Bill, a Property Practitioner may not enter into any agreement, formally of informally, whereby a consumer is obliged or encouraged to use a particular service provider, including an attorney, to render any service or ancillary services in respect of any transaction for which that Practitioner was the effective cause.